Unit 3 Assignment

School: University of Central Florida - Course: ACCOUNTING 554 - Subject: Accounting

The first step in building an effective risk-management plan is understanding the qualitative distinctions between the many types of risks that firms face. There are three categories of dangers in general. Any kind of risk may jeopardize a company's strategy and perhaps its survival. There are external, strategic, and preventive threats. Any of these dangers has the potential to make the others less severe (Musa, 2012). The findings of a stress test may help firms determine how they would react to significant changes in only one or two critical components, where the effect would be severe and immediate, but the time frame would be unknown. However, the benefits of stress testing are heavily dependent on the assumptions made about the degree of variable change, which might be misconstrued. Businesses cannot influence the likelihood of risk occurrences predicted by scenario planning and stress testing (Chappell, 2014). Managers, on the other hand, may make meaningful attempts to mitigate the consequences. The capacity of a company to network with other businesses determines its success (Musa, 2012). Product supply and demand variations are now much easy to recognize, making risk assessment considerably easier. A supplier may show their effectiveness and efficiency inside the supply chain by focusing on these four areas. Here are several examples: I.The process of identifying risks and evaluating them II.Distinguishing Between the Internal and External Environments III.Hazard therapy IV.Ongoing assessment and management of potential dangers 3 A supply chain breach is the most danger to suppliers. Obstacles do occur from time to time, slowing down the supply chain and causing certain commodities to be diverted. As a result, the product or service's completion may be delayed. One potential cause of these stumbling blocks is human error, since someone may have made a mistake that temporarily halted production (Edmead, 2007). One such occurrence is a car accident. If, for example, a fast motorist caused an accident that stalled traffic on the highway for three hours, preventing the delivery driver from delivering the crucial products to the company, the supply chain would come to a halt. Natural disasters and other unforeseen occurrences may sometimes serve as barriers. A hurricane is an example of such a natural occurrence (Edmead, 2007). If a storm strikes the location where a product is manufactured, facilities may be forced to shut for the safety of their employees. However, there are times when providing the final product to a paying customer is difficult. As an example, consider Amazon. The expected delivery time is used to compute Amazon's shipping expenses. Unexpected circumstances, on the other hand, may prohibit you from receiving the product when you intended. The customer's purchase may not arrive by the deadline owing to a strike at the airline (if air delivery) or the shipping company (if ground delivery). If there is a gasoline shortage and fewer cars or planes can travel, delivery may be delayed (Musa, 2012). It's also possible that the delivery was hampered by inclement weather. Commodity transportation might be hampered by manufacturing facility difficulties. It just takes a snag in logistics, a paucity of resources, or a lack of manpower. 4 Businesses that employ several suppliers have less risk than those who use a single supplier for all of their product requirements. Businesses must be prepared to employ alternative suppliers to fulfil product orders in order to minimize customer risk. What matters most is that the finished product is finished and ready to be delivered to customers on time (Musa, 2012). The first stage in carrying out an effective risk assessment is to categorize the various threats that the company confronts. Hundreds of various potential risks may exist depending on the size and structure of the organization (Edmead, 2007). Potential dangers include the following: I.Exposure to Potential Financial Losses II.Inherent dangers of new technologies III.Threats to the organization IV.Outside factors V.Threats in Project Management VI.Possible dangers of complying There are a few different strategies for reducing risk. These items are: I.Physical measures - Emphasis on stock safety via optimal usage and use of diverse suppliers II.Mitigation based on analysis - Plans and forecasts with an eye on "real time" material flow 5 III.Cost reduction measures concentrate on coordinating material movement with cash flow objectives.